AHMEDABAD: In the financial year 2018-19 that ended on March 31, the state government’s net revenue from Goods and Services Tax (GST) along with residual Value-Added Tax (VAT) income stood at Rs 35,544.7 crore, indicates data provided by the state commercial tax department. Despite a 12.7% growth in the net income of Rs 31,534.4 crore in FY 2017-18 through GST and VAT, the state has missed its targeted 14% growth.

According to state commercial tax department officials, the revenue should have been Rs 42,751.9 crore for FY 2018-19. This means, the state has a revenue deficit of Rs 7,207.1 crore, in FY 2018-19. “The revenue deficit will be compensated through central government’s assistance to ensure 14% growth in revenue through GST. The state has already received a sum of Rs 6,149 crore as assistance. The remaining dues would be cleared soon,” said a senior official of the state commercial tax department.

“Since Gujarat is a manufacturing-heavy state, it is losing out on significant tax revenue under the new tax regime because GST is a consumption based tax. However, thanks to the assistance from the central government, the state is reporting a consistent 14% growth year-on-year,” said Ajay Kumar, special commissioner – state commercial tax department. Top sources said that the 12.7% growth in revenue is not a good sign and it reflects slowing economic activity. “Given the GDP growth rate as well as inflation, the tax revenue should be ideally growing at more than 15%. If the central government assistance is halted, the state will be at a loss for revenue,” said the source in the state government.

State GST department officials also pointed out that despite a slew of enforcement measures, evasion of taxes remains high. SGST officials are increasingly focusing on improving tax compliance. “A number of bogus billing scams have been unearthed, through which fraudsters not just illegally claimed input tax credit but also evaded taxes,” said Kumar. “This is a clear loss to the state exchequer and thus, we are focusing on better enforcement and compliance. Recently, we conducted a drive for physical verification of suspicious GST registrations. The same is also being done for every new registration,” he added.

A recent Allahabad high court judgment may, however, provide some relief with the court ruling that there shall be no tax levied in case of purchases made at duty free stores at the arrival or departure terminals.